How To Buy $649K Home in Same Mortgage as $448K Home

Here we are going to discuss 'How To Buy $649K Home in Same Mortgage as $448K Home' by finding homex with Lowest Property Taxes in Good School Districts. We are going to use New Powerful Home Search, Scoring and Comparison Engine www.ThinkHome.com which not only gives you best bang for your buck, but also finds homes which reduce your Commute Time, Commute Cost and have Good School Districts.

Home is the largest purchase most Americans will ever make. And if you have enough money saved for Down Payment and have sufficient income to support Monthly Mortgage, then you should definitely think about buying a home. Many a times, renting is nothing but paying off Landlord’s mortgage. We have previously discussed Buy vs. Rent in detail in this article:   IS HOME OWNERSHIP RIGHT FOR ME?

Mortgage Components

If you want to buy a home, you want a bargain because everybody loves bargains!  We are going to discuss different ways of getting a Bigger, Better Home for the Budget you have set for yourself.  Two factors that have a significant impact on your buying power are:

1. Monthly Mortgage Costs
2. Commute Costs, which includes Fuel and Vehicle Costs.

We will talk about Commute costs in Part II of this Blog.  In this part, I want to focus on the Monthly Mortgage Costs. Your Monthly Mortgage payment typically consists of four components:

1. Bank Installment.  This is the money paid towards Principal and Interest.  Also, this is the only portion of your Monthly Mortgage Costs that goes towards building equity in your home.
2. Property Tax
3. Property Insurance
4. Private Mortgage Insurance (PMI).  PMI is not needed if you make at least 20% down payment.

Together, Bank Installment and Property Tax typically make up more than 90% of your Monthly Mortgage Costs.  While Bank Installment is directly proportional to the amount you borrow and the prevailing interest rate, Property Tax varies from town to town.  In short, Property Tax is a component that you can leverage to minimize your monthly costs.

Impact of Property Taxes on Buying Power

Below graph shows the impact property tax has on your monthly mortgage costs.  For a $600K home in New Jersey, you can pay as little as $2,770 or as high as $4,020 towards Bank Installment and Property Tax together.

As shown above, your Bank Installment is $2,270 in all situations, but the Property Tax component is $500/month in Low Tax Towns and as high as $1,750/month in High Tax Towns.  Another way to look at it is that Property Tax makes up only 18% of your monthly payment in a Low Tax Town, while the figure jumps to 44% in a High Tax Town.  And as you can imagine, your goal should be to minimize the amount you spend on Property Tax.

I want to further illustrate the impact of Property Tax on your buying power using the following graph. Notice what you can afford if you are paying $3,000 towards Bank Installment and Property Tax.  You can buy a $448K home in a High Tax Town or a Bigger, Better home worth $649K in a Low Tax Town. That is a whopping $200K more.  That is the additional wealth you will be building for yourself, if you pay less in Property Tax.

So, it is very clear that high Property Taxes affect your Buying Power and you should find homes where you pay as less in Property Taxes as possible.  Often, people are misled to think that Higher Property Tax rate implies a better town and a better school system, but that is not true.  In many cases, over paid public officials, inefficient spending of the tax payer’s dollars and lack of enough business activity in the town, leads to higher Property Tax rates. Check this article which describes why New Jersey has higher taxes.  It compares one state to other, but the reasons are same as to why one town has higher tax rate compared to another.  In New Jersey, towns such as Whippany, Mahwah, Basking Ridge, etc. have lower Property Taxes compared to several other towns.

How to Find Home in Good School District Having Lower Property Taxes

So, now we know two facts – 1) Paying less towards Property Tax can help you build more equity in your home, and 2) Even very good towns can have Low Taxes.  This is all good, but how do we find these gems where your property taxes are low and the schools are great?  When I did my home search, I spent hundreds of hours on doing this extensive research and analysis.  I first shortlisted the towns within my Commute range, then I filtered out any towns that had high tax rates. Finally, I filtered out towns that did not have a good school system.  Ultimately, I was left with a short list of towns that were not too far from my work location or my spouse’s work location, had low tax rates and had a great school system.  I consider all of this to be the “Step 1” of home search.  At this point, I moved onto “Step 2” of home search which was to look at properties in these towns; followed by “Step 3” where I conducted further due diligence about the homes that liked.  The unfortunate part of all this is that there was no home search engine or tool that takes care of all 3 steps involved in home search.  That is when I and a friend realized the need for an end-to-end home search engine and we built ThinkHome, an Intelligent Home Search Engine.

At ThinkHome.com, one search covers Commute, School Ratings and Budget (Down Payment and Monthly Mortgage).  Further, we assign ‘ThinkHome Score’ to each home where higher score implies lower spending on Property Tax and more towards creating wealth for you by building Equity in your home.

Case Study

I searched for homes on ThinkHome.com with the following parameters: Work location as Mahwah, NJ; Minimum GreatSchools Rating of 7 or more; $50K available towards Down Payment and $4,000 towards Monthly Mortgage.  See couple of results below (please note how ThinkHome is using PMI to your benefit).  Both homes are in good school districts and both are 22 minutes from the specified work location, but I can buy a $600K home in Wyckoff (ThinkHome Score 129) in my budget while I can buy only $500K home in Wayne (ThinkHome Score 107).  This is because the home in Wayne has much higher Property Tax compared to the home in Wyckoff.  

Ultimately, when more of your monthly payment goes towards Property Tax, you are left with less dollars to spend on Bank Installment and that in turn brings down your affordability.  That is where ThinkHome Score comes into the picture.  It allows you to find those gems, those homes that give you better bang for the buck.  It allows you to build more Equity in your home, your Future!

So, visit www.ThinkHome.com  today and find Bigger, Better Home which is still in your budget.

How To Buy Bigger, Better Home Which You Can Afford – Part I

Home is the largest purchase most Americans will ever make. And if you have enough money saved for Down Payment and have sufficient income to support Monthly Mortgage, then you should definitely think about buying a home. Many a times, renting is nothing but paying off Landlord’s mortgage. We have previously discussed Buy vs. Rent in detail in this article:   IS HOME OWNERSHIP RIGHT FOR ME?

Mortgage Components

If you want to buy a home, you want a bargain because everybody loves bargains!  We are going to discuss different ways of getting a Bigger, Better Home for the Budget you have set for yourself.  Two factors that have a significant impact on your buying power are:

1. Monthly Mortgage Costs
2. Commute Costs, which includes Fuel and Vehicle Costs.

We will talk about Commute costs in Part II of this Blog.  In this part, I want to focus on the Monthly Mortgage Costs. Your Monthly Mortgage payment typically consists of four components:

1. Bank Installment.  This is the money paid towards Principal and Interest.  Also, this is the only portion of your Monthly Mortgage Costs that goes towards building equity in your home.
2. Property Tax
3. Property Insurance
4. Private Mortgage Insurance (PMI).  PMI is not needed if you make at least 20% down payment.

Together, Bank Installment and Property Tax typically make up more than 90% of your Monthly Mortgage Costs.  While Bank Installment is directly proportional to the amount you borrow and the prevailing interest rate, Property Tax varies from town to town.  In short, Property Tax is a component that you can leverage to minimize your monthly costs.

Impact of Property Taxes on Buying Power

Below graph shows the impact property tax has on your monthly mortgage costs.  For a $600K home in New Jersey, you can pay as little as $2,770 or as high as $4,020 towards Bank Installment and Property Tax together.

As shown above, your Bank Installment is $2,270 in all situations, but the Property Tax component is $500/month in Low Tax Towns and as high as $1,750/month in High Tax Towns.  Another way to look at it is that Property Tax makes up only 18% of your monthly payment in a Low Tax Town, while the figure jumps to 44% in a High Tax Town.  And as you can imagine, your goal should be to minimize the amount you spend on Property Tax.

I want to further illustrate the impact of Property Tax on your buying power using the following graph. Notice what you can afford if you are paying $3,000 towards Bank Installment and Property Tax.  You can buy a $448K home in a High Tax Town or a Bigger, Better home worth $649K in a Low Tax Town. That is a whopping $200K more.  That is the additional wealth you will be building for yourself, if you pay less in Property Tax.

So, it is very clear that high Property Taxes affect your Buying Power and you should find homes where you pay as less in Property Taxes as possible.  Often, people are misled to think that Higher Property Tax rate implies a better town and a better school system, but that is not true.  In many cases, over paid public officials, inefficient spending of the tax payer’s dollars and lack of enough business activity in the town, leads to higher Property Tax rates. Check this article which describes why New Jersey has higher taxes.  It compares one state to other, but the reasons are same as to why one town has higher tax rate compared to another.  In New Jersey, towns such as Whippany, Mahwah, Basking Ridge, etc. have lower Property Taxes compared to several other towns.

How to Find Home in Good School District Having Lower Property Taxes

So, now we know two facts – 1) Paying less towards Property Tax can help you build more equity in your home, and 2) Even very good towns can have Low Taxes.  This is all good, but how do we find these gems where your property taxes are low and the schools are great?  When I did my home search, I spent hundreds of hours on doing this extensive research and analysis.  I first shortlisted the towns within my Commute range, then I filtered out any towns that had high tax rates. Finally, I filtered out towns that did not have a good school system.  Ultimately, I was left with a short list of towns that were not too far from my work location or my spouse’s work location, had low tax rates and had a great school system.  I consider all of this to be the “Step 1” of home search.  At this point, I moved onto “Step 2” of home search which was to look at properties in these towns; followed by “Step 3” where I conducted further due diligence about the homes that liked.  The unfortunate part of all this is that there was no home search engine or tool that takes care of all 3 steps involved in home search.  That is when I and a friend realized the need for an end-to-end home search engine and we built ThinkHome, an Intelligent Home Search Engine.

At ThinkHome.com, one search covers Commute, School Ratings and Budget (Down Payment and Monthly Mortgage).  Further, we assign ‘ThinkHome Score’ to each home where higher score implies lower spending on Property Tax and more towards creating wealth for you by building Equity in your home.

Case Study

I searched for homes on ThinkHome.com with the following parameters: Work location as Mahwah, NJ; Minimum GreatSchools Rating of 7 or more; $50K available towards Down Payment and $4,000 towards Monthly Mortgage.  See couple of results below (please note how ThinkHome is using PMI to your benefit).  Both homes are in good school districts and both are 22 minutes from the specified work location, but I can buy a $600K home in Wyckoff (ThinkHome Score 129) in my budget while I can buy only $500K home in Wayne (ThinkHome Score 107).  This is because the home in Wayne has much higher Property Tax compared to the home in Wyckoff.  

Ultimately, when more of your monthly payment goes towards Property Tax, you are left with less dollars to spend on Bank Installment and that in turn brings down your affordability.  That is where ThinkHome Score comes into the picture.  It allows you to find those gems, those homes that give you better bang for the buck.  It allows you to build more Equity in your home, your Future!

So, visit www.ThinkHome.com  today and find Bigger, Better Home.

How Two Immigrant Are Changing the Way America Does Home Search

This is the story of how two immigrants built ThinkHome  and how they are trying to build the Future of Home Search, but before that....

Something About Us......

We (me and my friend) are two immigrants with killer product which will change the way America does home search. I came to this Great Country 15 years back to get 'Master of Science' degree. After M.S., For last 11 years I am working in financial technology. This country is great to us and has given us many opportunities to fulfill our American Dream

Real Estate Investments and Buying our First Home

In 2011, when real estate prices were still depressed and interest rates were low, we first started buying and renting small condos. In 2012, we decided to buy homes.

For me, following parameters were important:

1. I was working in New York and any town which is in  1 hour Commute Distance was suitable choice for me.
2. I also wanted a Good School District as I wanted to give better education to my daughter.
3. I wanted to put down only 35K - 40K as Down Payment.  I had money for 20% down payment, but I wanted to put only 10% and use the rest to buy another investment condo
4. I knew the impact of Property Taxes. Essentially if you save $250/month in property taxes, you can afford home which is worth $50K more.
5. I knew the impact of Commute Costs. Similar to taxes, if you save $250/month in commute costs, you can afford home which is worth $50K more
6. I knew Detrimental Impact of Increased Commute time on Health and Happiness, so I wanted to avoid Long Commute

So armed with this knowledge, I started my home search and found out how difficult it was to search my Dream Home which can satisfy above requirements. There was no intelligence in home search marketplace. There was no website which was offering end-to-end solution. What I had to do was :

1. First find all towns which are in 1 hour commute distance from downtown NYC.
2. Now discard those towns which have high property tax rates. You can get this information from different sources. Because I was looking in 1 hour radius from New York, I had to analyse hundreds of towns. It took several days for me to go through all the available towns and find towns having lower property taxes.
3. Then further find school ratings for the schools in these towns and filter out towns which don't have good school ratings. This was another monumental task. GreatSchools.org  is a very good school rating website where you can research schools.
4. Once you narrow down towns, start finding homes for Sale in those towns. Personally I liked simple look of Weichert.com  than Zillow or Trulia, so I did most of my search on Weichert.
5. Once you like the particular house, go to Google Maps to see actual door-to-door commute time.
6. If it fits the commute time, do the cash flow analysis to see if  Monthly Mortgage (Bank Installment + Property Taxes + PMI + Property Insurance + Association Fees)  fits within my budget
7. Once all above requirements are satisfied, then go and see the house

You can see how tedious is the process of home hunting.  Many times people do reverse, first they see house and then they see if it fits all their requirements. Some times house fits all requirements, but deal fails on Mortgage Approver's desk as the Monthly Mortgage is not within User's reach because of user's inadequate Gross Income to serve the mortgage. Buyer's real estate agents also suffer as they have to show many houses to buyer and if deal fails due to mortgage, they have to start all over.

My friend also went through this whole process while buying his home and that's when we decided to address this huge product gap in home-search market and we decided to build the website to address these issues and that's how ThinkHome was born.

ThinkHome - Intelligent Home Search

1. ThinkHome takes all the hassle out of home search. It is the only home search engine that allows you to search for homes based on preferred commute time, school rating preference, available down payment and mortgage budget.
2. When user comes to ThinkHome, he/she specifies his/her work location, preferred commute mode and maximum amount of time user wants to spend in commute. User can also enter same information about spouse. Next User specifies minimum School Rating Preferences for Elementary, Intermediate and High School. Finally User specifies the Down Payment he has and Monthly Mortgage he can afford.
3. When search result is displayed, it shows homes which match user's/spouse's Commute Criteria, School Rating Preferences and which fit user's budget. As you see, we don't even ask the price range to user, but we calculate it for user.
4. ThinkHome goes even further, It assigns “ThinkHome Score” to each home.  Higher score implies lower spending on property tax and commute cost; thus making sure that more of your hard-earned dollars are going towards building equity in your home.
5. ThinkHome’s comprehensive search result page shows commute time to work location (powered by Google), GreatSchools ratings and a detailed breakdown of all costs.

Our Goals at ThinkHome

WE want to give home buyers all necessary tools at one place to Make Smart and Educated Home Buying Decisions. We want to reduce Commute Time and Costs to make people Happier and Reduce Carbon Footprint. We want people to send their Kids to Good School to get Great Education. And we want people to reduce wasteful spending on commute and taxes and build more equity in their homes.

We hope that ThinkHome will help you find your next Dream Home.

Is home ownership right for me?

The age old question!  As you can imagine, the answer depends on every individual’s personal situation.  But, generally speaking, home ownership is the way to go.  Following example should outline why owning a home makes sense.  Please bear with all the numbers, but they are required to get the point across.

A close friend of mine recently purchased a condo in NJ as an investment and rented it out.  He paid $194k for the property with 20% down payment ($39k).  So, he had to borrow the remaining $155k from a bank.  The loan is a 30 year fixed loan, with $4.125% interest rate.  The property tax rate and the association fee for this investment condo are on the higher side, but it made sense because of the location and school district of the property.  And of course, there is a small payment towards property insurance.  So, let’s summarize the overall monthly cost.

• $751 towards Bank Installment ($155k for 30 years @ 4.125%)
• $0 towards PMI (since 20% down payment)
• $383 towards Property Tax ($4,600 per year)
• $30 towards Property Insurance ($360 per year)
• $356 towards Association Fee

Overall, his monthly cost is $1,520.  In comparison, he is charging the tenant $1,725 per month (in line with the ongoing market rate).  Effectively, the tenant is paying the mortgage and then some more.  So, the question you have to answer for yourself is – Would you rather pay your landlord’s mortgage or your own mortgage?

If you are still not convinced, let’s try this.  Over the years to come, the increase in rent will outpace the increase in monthly costs, making it even more lucrative for my friend.  And at the end of the 30 years, the loan amount will be paid off and my friend will own the condo free of any bank loan.  Not to mention, the market value of the condo (due to inflation, etc.) will be far more than the $194k he has paid now.  In comparison, the tenant will have no ownership in the condo whatsoever, despite of having effectively paid the mortgage for all these years.

Now let’s talk about some of the hurdles to home ownership.

I don’t have enough down payment to buy a home.  Probably the single largest hurdle to home ownership.  I don’t want to make it sound too simple, but you need to bootstrap and put some money away to buy your home.  Contrary to popular belief, you do not always need 20% down payment.  In fact, the average down payment across the entire nation is about 10%.  Also, you can consider starting small by buying a Condo and then upgrading to a bigger place few years down the road.

I am uncertain about the future.  Several people are not sure where they will be in 5-10 years from now, whether they will have a job, etc.  These uncertainties are very common and apply to most people.  But, still 65% of Americans own a home.  The point is, sometimes we just have to gather the courage and make that commitment.

An eminent move.  The entry and exit costs to home ownership are significant enough that a short holding period may not give you enough time to recover these costs through property appreciation.  As a rule of thumb, if you anticipate moving towns and therefore, selling your home in less than 5 years, it probably makes sense for you to rent.

Property maintenance is too much hassle.  This is my least favorite excuse.  Yes, it is a hassle, but I think it is worth the investment in your future.  Yes, it is no longer as easy as calling the landlord; and lawn mowing, snow ploughing aren’t exactly things to look forward to.  If maintenance is a hassle and is the roadblock between you and home ownership, townhomes or condos may be more suitable for you.

What if the property prices crash after I buy a home?  No one can rule this out completely, but considering that average home prices are still below the 2006-2007 highs, the risk exposure is very limited.  Heated housing markets such as San Francisco and Seattle (thanks to the technology boom!) pose a larger downside risk during downturns, but a collapse in property prices is highly unlikely.  Consider this – USSTHPI, which is a measure of housing prices across America, has grown by 4.5% year over year (compounded growth) between 1975 to 2015.  This includes the last 10 years which haven’t exactly been the best years for real estate.  So, if you are in this for a long haul, you will come out a winner!

So, if you are convinced about buying a home, check out ThinkHome.com.  It is an innovative home search engine that allows you to search for homes based on factors critical to any home buyer.  You can search for homes based on proximity to work location, school quality, available down payment and monthly mortgage budget.  Moreover, ThinkHome assigns a score to every home within your search result to rate value for money; a higher score implies lower expenditure towards property tax and commute.  This website also provides a detailed breakdown of all costs associated with each listed home, the estimated commute time from each listed home to the user’s work location and relevant school ratings.  All critical information in one place!

Anyway, the important thing to keep in mind is that every dollar you spend towards rent is going towards paying your landlord’s mortgage.  So, find your dream home now and begin building equity in your home, in your future!

(Visit https://research.stlouisfed.org/fred2/series/USSTHPI#  for more statistics on USSTHPI)

Why School Ratings and Home Search go hand in hand?

Everyone understands the importance of a good school system.  But, we often forget about the role it plays in building our home value.  With the emergence of school rating agencies such as GreatSchools, people are getting savvier about comparing the local school systems before making any home buying (or renting) decision.  This means that the local schools will play a very critical role in the marketability and valuation of your home.  This can be illustrated by taking the example of Basking Ridge, NJ.

Basking Ridge is a town nestled in the Somerset Hills region of Somerset County, New Jersey.  The excellent school system of this town is by far the single largest reason for this town to be steadily rated as one of the best towns in New Jersey.  The school system in basking Ridge is consistently rated 9 or 10 (on a scale of 1 to 10, 10 being the best) by GreatSchools.  The median sale price of a home in Basking Ridge has gone up from $540k in Aug-2010, to $596k in Aug-2015.  That is an increase of 10% over the last 5 years.  For those who have seen the real estate boom days, this may not seem much.  But, when you consider that the median home price in New Jersey has increased from $312k to a mere $313k during the same period, you realize the vital role school system plays in the valuation of your home.

In the coming years, school ratings will play an ever important role in the home search process, as home buyers now have tools at their disposal that allow them to search for homes based on desired minimum school rating.  Take for example the newly launched home search engine ThinkHome.com.  This website allows you to specify the minimum desired school rating for each of the 3 types of schools (Elementary, Middle and High School).  User’s search result will include only those homes that meet or exceed the minimum rating specified by the user.  Thus, tying School Ratings to Home Search.

So, for the folks who are looking to buy a new home, let’s get smarter in our home search process and pay the necessary attention to school ratings.  If you own a home already, let’s make it loud and clear to the local school authorities that you care about the ratings.  Welcome to the new era in home search!

How to approach a successful Home Search?

Have you ever wondered why most of us find a home first and then try to understand the commute time to work location, associated school ratings and the estimated mortgage?  Doesn’t it seem counter-intuitive?

Wouldn’t it be better if there was a home search engine that understood your desired commute time, school rating preference and mortgage budget; and then located homes for your that met all these requirements?

If you ever wondered about these questions, you are not alone.  The home search engines have not caught up to the true needs of home buyers and renters; not until now.  Fortunately,  www.ThinkHome.com has heard your voice and have solved this problem using their patent pending technology.

The key advantages of using ThinkHome.com

• Commute based Home Search
• School Rating driven Home Search
• Down Payment & Mortgage Budget based Home Search
• Embedded Google Commute Time & GreatSchools Rating
• Understand your Total Cost of Ownership (TCO)
• Minimize your Fuel Cost and Go Green!
• Find homes in Towns with lower Property Taxes
• Maximize the Equity you build in your home
• Make Smart and Educated Home Buying Decisions

How ThinkHome.com works?

• ThinkHome.com is the first and only home search engine that allows you to search for homes based on preferred commute time, school rating preference, available down payment and mortgage budget.
• This search engine helps you find homes that will reduce your commute time. Happy Commuter, Happy Family!
• Reduced commute implies lower fuel consumption. Go Green, Save The Planet!
• ThinkHome helps you find homes in better school districts. Better schools, better education, better future for the kids!
• ThinkHome.com does not ask you to estimate price range for your dream home. Instead, it calculates it based on your available down payment and  monthly mortgage budget.
• ThinkHome plays the role of your financial adviser. Their patented algorithm compares all the homes in your search result and assigns “ThinkHome Score” to each home.  Higher score implies lower spending on property tax and commute cost; thus making sure that more of your hard earned dollars are going towards building equity in your home.
• By default, your search result is sorted by ThinkHome Score. In short, the topmost home in your search result is not only within your preferred commute time, school rating preference and budget parameters, but it also gives you best bang for the buck.
• ThinkHome’s comprehensive search result page shows commute time to work location (powered by Google), GreatSchools ratings and a detailed breakdown of all costs.

No more dreading about home search.  No more wasting money on rent.  Let’s find our dream home on www.ThinkHome.com and begin building equity in your home, in your future!